Sell

Operating performance: Slump in volumes was offset by robust pricing scenario in Gujarat during Q4FY20 (NSR +19%y/y)andsofterenergycosts.Accordingly,EBITDA/te ofSNGIstoodatRs1,069sturdygrowthof65%y/ywhile absoluteEBITDAgrewby~12%toRs514mn. Leverage position: Total Net debt/EBITDA of company...

We discussed consumptions trends in the wake of Covid-19 with the management of V-Mart Retail (VMART).

Background: Berger Paints is the second largest decorative paint company in India. The Company operates seven manufacturing facilities spread across India, and four overseas manufacturing facilities. The company has second largest distribution network of ~11,500 active dealers and ~12,000 tinting machines. Berger has a strong presence in East and North India, which accounts for 60% of its distribution network while South & West India accounts for 40% of distribution network. Company derives ~80% of revenue from decorative paints and the rest from industrial paints of which Automotives accounts for 8%, powder coating...

Page Industries (PAGE) reported lower than expected Q4FY20 numbers with revenue declining by 11% YoY at Rs 541 Crs vs Est Rs582 Crs impacted by steep fall in volumes (down by 19% vs 8% decline as estimated).COVID-19 led shutdownsince the beginning of March'20 largely impacted PAGE's sales in Q4F..

Management stated on the call that Apr20 sales were negligible, May20 sales were down 6070% YoY, and Jun20 sales (while relatively better than May) are a long way off from normal. Moreover, management further stated home delivery is unlikely to have a significantly positive impact in the current year due to models being in the early stages. Additionally, the surge witnessed in demand in off-trade outlets in the first few days following the resumption of operations in a few states has tapered off significantly. It also increasingly appears that bars, restaurants, and pubs (20% of sales) would re-open only in 2HFY21. expansion to a combination of positive price/mix and more stable input costs. Employee costs were up 140bp YoY to 9% of sales and other expenses 20bp YoY to 32.6%. Consequently, standalone EBITDA margins for 4QFY20 were In FY20, sales/EBITDA/PAT registered growth of +0.5%/-23.1%/-24% YoY.

Background: Balkrishna Industries (BIL) is focused solely on 'off-highway' tyres catering to agricultural & industrial segments. The company has a ~7% share of the global market. While OTR forms ~65% of the global market, for BIL, it only contributes ~33% to its revenue. The company has been undertaking various actions like setting up warehouses in markets in North America and Europe to be closer to the customer and have a just in time (JIT) system. The company sales cover over 130 countries through distribution network in Americas, Europe, India and Rest of the world....

Outlook and Valuation: We value INFOE at Rs. 2092 based on SOTP. While the standalone business is valued at a 3-yr historical average FY22E PE of 64x, Policybazaar and Zomato are valued based on their last round of funding.

Info Edge (INFOE) posted muted YoY revenue growth of 10% in Q4FY20, the lowest in the last 12 quarters.

Exuberance most likely to fizzle out in the near-term. GNP rallied 27% on Favipiravir's (Fabiflu) approval by DGCI (Drug Controller General of India) for treating COVID-19 patients. We believe this reaction has an irrational exuberance and will likely fizzle out in the near-term as 1) Cipla, Strides and Natco/Laurus approval will follow soon leading to a cut-throat...

Valuation and Risks:A cash rich and clean balance sheet, management with excellent track record and high brand recognition will help sustain valuations.